Cash dollars deposit increasing in banks
Staff Correspondent : Cash dollars have started to rise in recent times as expatriates have been allowed to accumulate dollars in banks with special dividend benefits. If the amount of keeping dollars continues to increase in this way, naturally the cash dollar reserves in the bank will also increase. But if the withdrawal rate is higher than the retention rate then it will decrease again. Because this method is basically like accrual calculation. Those concerned say that such stocks of expatriates may increase further before Eid. However, there is also a risk of low tide after Eid.
Meanwhile, analysts say that only those banks that have enough dollars will be able to do various dollar transactions including opening LCs. But banks that have less reserves cannot take such risks. Because the customer has to pay back when he wants.
According to Bangladesh Bank’s latest report, cash in the bank rose to $39.39 million as of March 24, from $32 million in February and $28 million in January. Sector stakeholders say Bangladeshis are allowed to open and operate foreign currency accounts. In addition, offshore banking laws were enacted to facilitate
dollar deposits for non-resident Bangladeshis and foreigners in return for favorable returns. Besides, the remittance flow is gradually increasing. Due to these reasons the dollar holding is continuously increasing. Bankers said banks have started paying up to 7 percent interest on dollars deposited as RFCD (Resident Foreign Currency Deposit Account) by customers. Besides, these dollars are being spent indiscriminately at home and abroad. Several banks have announced an offer to deposit $10,000 in cash from this account every time they travel abroad. Because of these reasons, the bank’s cash dollars are increasing now.
At present, most of the cash dollars are stored in Eastern, The City, BRAC, Dutch-Bangla, Prime, Pubali, Standard Chartered, HSBC, Islami and several other banks. Apart from US Dollars, RFCD accounts can also be opened in Pounds, Euros, Australian Dollars, Canadian Dollars, Singapore Dollars.
The head of the treasury department of a private bank said that the bank’s cash dollars may increase due to discounting of RFCD accounts. Because here people can now keep up to $10,000 thousand after traveling abroad without any questions.
He also said that now there is no difference between the dollar rate given by the bank and the curb market. Banks are giving Tk 114-115 per dollar despite getting Tk 117-118 in curb market. So those who have cash dollars are keeping them in the bank.
However, it is not the case that the bank can sell the cash dollar only if it increases. Because there are many people who travel abroad regularly, may need it again after a few days, keep it in student account and also keep it for going abroad before treatment. But they will take them after the appointed time. They are not salable to banks. So how sustainable are these dollars first has to be seen.
Bangladesh Bank issued a notification on December 3 last year to increase dollar reserves. It provides additional benefits including interest on Resident Foreign Currency Deposit or RFCD accounts to return dollars kept at home to the bank. After this, several other banks including The City Bank started opening related accounts with extra initiative in the light of the notification.
Any Bangladeshi citizen who has come from abroad and is above 18 years of age can go to any bank and open an RFCD account.
In this case, when you traveled abroad, it is not the main thing. The main thing is that the credentials of those who have gone abroad i.e. passport and visa documents should be submitted to the bank. Two copies of photograph, nominee, National Identity Card (NID) and Tax Identification Number (TIN) are also required for account opening. Contrary to this calculation, banks issue debit cards to customers without providing a check book, which does not require any authorization for spending.
A citizen can deposit up to $10,000 as RFCD for each trip abroad. As a result, if someone has traveled abroad 10 times in the last year, he can deposit up to $100,000 without any documents. However, if he wants to deposit more dollars in each trip, he will have to submit a customs declaration to bring more dollars into the country.
As per the central bank’s new guidelines, banks are now offering up to 7 percent interest against this amount. According to the instructions of Bangladesh Bank, the banks will give at least one and a half percent interest on the deposits with the benchmark rate. The Secured Overnight Financing Rate (SOFOR) is now 5.31 percent. Accordingly, the interest rate as RFCD stands at 6.81 percent.
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